One of Australia’s newest internet service providers is expecting a significant hit to its sales as a result of delays announced by the National Broadband Network affecting customers seeking to be connected through their existing pay TV or internet cables.
The delay, which will last for six to nine months for customers on the hybrid fibre coaxial (HFC) network, will affect Singapore internet start-up MyRepublic particularly hard, said its managing director, Nicholas Demos.
MyRepublic was told about the NBN delay on the same day as the information was made public. Photo: Glenn Hunt
“Twenty-two per cent of our new orders are on the HFC network. When they turn it off next week, our orders will drop by 22 per cent. This will have a big effect on us,” he said.
MyRepublic has a 3 per cent share of the NBN market, with 60,000 customers announced at its one-year Australian anniversary celebration on Thursday.
But given a large proportion of its new customers are those expecting to connect to broadband through HFC, the delay will have a big impact on its earnings.
Mr Demos said the company was told about the delay on the same day as the information was made public.
“It doesn’t bother the incumbents because their customers just remain with them until they eventually are able to move onto the NBN.
“But these are new customers we don’t get … it’s a big hit,” Mr Demos said.
MyRepublic Australia’s Managing Director Nicholas Demos and CEO Malcolm Rodrigues in their Sydney office. Photo: Steven Siewert
Telstra chief Andrew Penn slashed his earnings forecast for the year to June 2018 by $600 million on the back of the delays, though the telco giant doesn’t expect any long-term implications.
Despite the NBN setback and plans yet to be put in place for how to “bridge the gap” it has been left with, MyRepublic chief executive Malcolm Rodrigues was bullish on the Australian market.
He expected the NBN Co’s decision to delay would provide a better experience for customers in the long run.
“Australia is the fastest-growing market we have. There is a demand for speed,” he said.
MyRepublic is preparing for a future initial public offering, he said, with the Australian Stock Exchange looking increasingly attractive as a listing location.
Later next year, the company expects to start a mobile service in Australia, offering bundled services to take on the big local providers, with an initial aim to achieve 5 per cent share of the mobile market in Australia.
Mr Rodrigues said the strategy would not be about “cut price”, but best “value” offers.
“We want to offer a seamless experience where you never have to think about your provider,” he said.
He didn’t rule out unlimited data mobile plans as a future consideration, but said speed was the main focus.
Discounts and attractive pricing for bundles is a key strategy of major global competitor TPG Telecom, which is set to build Australia’s fourth mobile network.
Questions were raised at TPG’s annual general meeting on Wednesday about what strategies it could use outside of discounting and bundling to remain competitive.
TPG successfully bid against MyRepublic for spectrum in Singapore to build a fourth mobile network last year.
In 2015, former Telstra executive David Thodey said there were more concerns about third-tier businesses, including MyRepublic, being a disrupter for large telecommunications companies than second-tier rivals TPG and iiNet.